The impact of economic globalization on renewable energy in the OECD countries

Abstract

This paper analyzes the determinants of renewable energy consumption in the panel data of 30 OECD countries for the period from 1970 to 2015. The unique role is given to the effect of economic globalization on renewable energy. We consider several measures of economic globalization and apply different econometric techniques. We find the positive impact of the per capita income, the per capita carbon dioxide emissions, and the real price of oil on renewable energy. Also, a higher level of economic globalization promotes renewable energy, and the evidence is robust to the different measures of economic globalization. In line with our findings, promoting the economic aspects of globalization will enhance renewable energy. Thus it can suppress the adverse effect of climate change and global warming on living human beings and natural habitats in the long-run. Therefore, we need to enhance our knowledge of how globalization promotes renewable energy not only for the OECD countries but also for other developing and developed economies. From a policy perspective, we suggest that policymakers and governments in OCED countries should consider economic globalization as a renewable energy promoting mechanism while designing their energy demand policy for the protection of natural environmental health.